Vistara, India’s newest pan-India airline, took the trouble to prepare a report on the aviation sector in India, highlighting the numerous areas in which India can and must improve. The report also concluded that Indian aviation is blessed with undeniably strong fundamentals such as:

A large and fast growing domestic market with potential for sustainability.

A strong technical and skilled workforce that can support aviation in various functions.

A traditionally service-driven culture, which augurs well for the hospitality industry.

The report went on to state that India is not a global aviation power today despite many such favourable characteristics because of poor decisions that have actively hindered the country’s aviation sector’s growth and competitiveness.

Key Take-aways, as summarized by the Vistara communications team:

1. Criticality of Aviation Sector

Aviation contributes to around 5% of GDP in leading global markets

3 billion people or 40% of the global population fly vs. low 1-2% penetration in India

Annual per capita seats in India are a quarter of China, Indonesia, Thailand

Aviation drives 27% of UAE GDP; 5.4% of US GDP

Aviation is growing rapidly in India; incremental passengers this decade was 3 times in previous 50 years

2. Potential of Indian civil aviation sector

Annual contribution of USD 250 billion to Indian economy by 2025

Employment creation to multiply 10 times to 2.3 million by 2050

Number of domestic passengers to grow 17 times to 1.1 billion by 2050

Number of international passengers to grow 10 times to 500 million by 2050

Domestic freight to increase eighteen times , and International freight more than eight times by 2050

Number of aircraft to multiply by 14 times to about 5600 by 2050

3. Policy Measures Required

1. Cost of doing business

Duties make ATF, which can constitute 30-35% of operating costs, 45% more expensive in India

Removal of sales tax will reduce ATF costs by 20% thus reducing operating costs by 7%, and stimulating air travel by around 8-9%

High taxation on MROs makes it cheaper to send aircraft abroad for maintenance, going against “Make in India” vision

Aeronautical charges are amongst the highest in the world

2. Ease of doing business

4 months in US vs. 90 days in UAE vs. more than a year and 10 agencies in India for getting an AOP